By Andrei Barysevich, Director of Advanced Collection at Recorded Future
In mid-2016 members of the cybercriminal underground began discussing their growing dissatisfaction with Bitcoin as a payment vehicle. In light of this, Recorded Future conducted an extensive, and manual, analysis of 150 most prominent message boards, marketplaces, and illicit services to see what the cybercriminals had earmarked as the next major cryptocurrency player, and why. This analysis led to the unexpected revelation that Litecoin is surpassing other cryptocurrencies as the preferred payment vehicle and, after Bitcoin, currently stands as the second most dominant coin on the dark web.
Dissatisfaction with Bitcoin
The rise, and falls, of cryptocurrencies isn’t just something that those of us in the industry have been tracking. Interestingly, Recorded Future noticed an increase in the frequency of discussions among members of the cybercriminal underground regarding the functionality, security, and usability of cryptocurrency. The majority of members seemed to be sharing their growing dissatisfaction with Bitcoin as a major payment vehicle.
The recent upsurge in popularity of Bitcoin among household users, speculators, and institutional investors around the world, has placed an enormous load on the blockchain network, causing larger payment fees. Due to this, Bitcoin payments have become economically infeasible.
As with any business agreement, speed of payment completion is crucial, and this is especially true for the dark web. With its inherent risk of transacting and distrust among its members, any delay, no matter how minor, increases the risk of being scammed. The prospect of having to wait for up to 24 hours to confirm their transactions, as well as the chance of having to pay exuberant payment fees on small transactions, many of which cost between $50-$300, has rendered Bitcoin payments unusable in dark web.
Consequently, cybercriminals are moving to alternative payment methods.
As with many things, different groups, depending on their location, have their own personal preferences. For example, Eastern European criminals are more proactive in the implementation of alternative payment options compared to the English-speaking communities. Furthermore, the research unveiled which cryptocurrency each group prefers.
It seems Russians favor the accessibility and convenience of Litecoin, due to its more diverse and established supporting infrastructure, whilst English-speaking members focus more on security, therefore leaning towards Monero’s built-in safety features.
Litecoin gains popularity
Contrary to what Recorded Future learned by observing the chatter between criminals over a series of weeks, Bitcoin appears to remain the gold standard in the dark web, with all vendors still accepting it as payment. Nevertheless, Litecoin has emerged as the second most popular currency, with 30% of vendors willing to accept it.
History of Litecoin
Introduced in 2011, Litecoin is the second oldest cryptocurrency after Bitcoin, and was intended to be a superior version of this. Litecoin’s core technology is an improved version of Bitcoin’s. It conducts transactions faster, resulting in significantly lower commission fees and a larger number of coins being mined, whilst piggybacking off an extensive Bitcoin infrastructure.
Nevertheless, despite all its advantages, Litecoin does not offer any additional security. Just like Bitcoin, Litecoin transactions are entirely transparent.
On reflection, I’d expect that the cryptocurrency diversification trend will only intensify, with Bitcoin losing its place as a dominant dark web payment method in the next six months to a year. However, despite likely having a much smaller market share, Bitcoin will remain one of the main payment instruments on the dark web. It is clear that Litecoin, swiftly followed by Dash, in addition to Bitcoin will stand as the everyday payment currencies of the dark web. But this comes with a warning, as the rise of these payment methods simultaneously occurs amongst the general population, malicious tools such as ransomware will also continue to evolve to take advantage of the mainstream trend.